Request for Reformation of Pooled Special Needs Trust May Proceed

A U.S. district court refuses to dismiss a claim for reformation of a pooled special needs trust to force the trust to distribute a deceased beneficiary’s remainder interest to the beneficiary’s family. National Foundation for Special Needs Integrity v. Reese (U.S. Dist. Ct., S.D. Ind., No. 1:15-cv-00545-TWP-DKL, Feb. 5, 2016).

Theresa Givens received a settlement in a products liability case and deposited it into a pooled special needs trust run by the National Foundation for Special Needs Integrity. She named herself as remainder beneficiary of the trust. Shortly after the trust was funded, Ms. Givens died, not owing any money to Medicaid. Ms. Givens’ estate sought the distribution of the money in the trust to her heirs, but the because Ms. Givens had named herself as the remainder beneficiary, the trust refused to distribute the funds.

Three and half years after Ms. Givens died, the trust filed a claim, seeking a declaration that transferring Ms. Givens funds into the trust’s remainder account was proper. Ms. Givens’ estate filed a counterclaim for return of the funds, asking for reformation and deviation of the trust. The estate argued Ms. Givens’ wish was that her children receive the funds. The trust filed a motion to dismiss, arguing that the estate’s claim is time barred and that the estate did not plead all the elements of the deviation claim.

The U.S. District Court, Southern District of Indiana, denies the motion to dismiss, holding Ms. Givens’ estate presented enough evidence that Ms. Givens mistakenly named herself as remainder beneficiary to allow the case to proceed. In addition, the court rules that the question of whether the claim is time barred is not properly addressed that this stage.

For the full text of this decision, click here.

For an earlier news article about the National Foundation for Special Needs Integrity, click here.